On the Economic Consequences of Index-Linked Investing
NYU Stern School of Business; National Bureau of Economic Research (NBER)
NYU Working Paper No. 2451/31353
A market index summarizes the performance of a group of securities into number.1 The use of stock market indices in particular has been growing exponentially for years. Since Charles Dow introduced his indices in 1884, the number of distinct stock market indices reported in The Wall Street Journal has increased roughly 5 percent per year, as shown in Figure 1. Today’s Journal reports not just the Dow Jones Industrial Average (DJIA) and the S&P 500; it also reports on the Turkey Titans 20 and the Philadelphia Stock Exchange Oil Service Index. Markets are being tracked in more and more detail, and Figure 1 suggests that there is no end in sight.2
Number of Pages in PDF File: 15working papers series
Date posted: December 14, 2011
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